How To Obtain A Mortgage Broker License In Multiple States

This Article Is About How To Obtain A Mortgage Broker License In Multiple States

Individuals who want to become mortgage loan officers need to meet certain educational requirements and become licensed in the state they want to originate mortgage loans. Becoming a full-time mortgage loan originator can be very rewarding. One of the great benefits of becoming a loan officer is that you can work remotely. You normally do not have to meet clients face to face like real estate agents. You can also represent clients out of state as long as you are licensed in the state. A loan officer can do business in all 50 states remotely as long as they are licensed in the state they originate from. In order for the loan officer to be able to get licensed in the individual state to do business, the sponsoring mortgage company of the loan officer needs to be licensed as a company as well.

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How To Obtain A Mortgage Broker License: Getting Your Individual NMLS MLO License?

You do not have to be hired and/or sponsored by a mortgage company for you to be able to get your individual NMLS Mortgage Loan Originator (MLO) license. However, there are certain states like Georgia and/or California that you need to be sponsored during your license application and approval process. Other states allow individuals to apply for their NMLS individual license once they have passed the national NMLS Federal MLO examination. The federal NMLS MLO national examination is a three-hour 125 questions national exam. You need a 75% passing grade for you to pass the national NMLS MLO Federal examination.

How To Obtain A Mortgage Broker License In Multiple States: The 20-Hour NMLS Course By An NMLS-Approved Course Provider?

Another requirement to be eligible to apply for your NMLS license is for you to take a one-time 20-hour NMLS course administered by an NMLS Approved Course Provider.

There are many NMLS Approved Course providers. These course providers can offer the 20-hour NMLS course at a brick and mortar location or it can be administered as an online course. For more information about enrolling at an approved NMLS course provider, please request and address your questions in the comment section below.

Once you have completed the 20-hour NMLS MLO approved course, you can sit for the 125 questions national NMLS MLO federal examination. Once you have passed the 125 questions NMLS MLO federal exam, you are now eligible to apply for each state NMLS license. Every state has different licensing requirements. You need to get the state NMLS license if you want to originate a mortgage in the individual state. Speak With Our Loan Officer for Mortgage Loans

Applying For State NMLS License

Each state has different requirements for getting licensed. Many states require additional annual continuing education hours. Every year, loan officers need a minimum of 8 hours of continuing education (CE) hours to renew their NMLS licenses. However, many states require additional hours on top of the minimum 8 hours. To get licensed in a state that requires more hours than the minimum 8 hours of CE, the loan originator needs to meet the state’s additional hour requirement. You can take the additional hours of continuing education hours at any NMLS-approved course provider.

Distance Between Personal Residence And Nearest Branch Office Of The Mortgage Company

Some states have distance to branch office and/or corporate office distance requirements. What this means is if you want to get licensed in a particular state, the state can have a mandatory maximum distance requirement between the nearest branch office of the mortgage company and the residence of the loan officer. The nearest branch near the loan officer’s residence needs to be licensed in the state the loan officer is seeking to get licensed. If the nearest branch office of your mortgage company is out of state and/or further than the distance requirements, you cannot get licensed in that particular state.

NMLS Licensing Process

Every state has its own licensing process for NMLS MLO applicants seeking to get licensed. However, states have common regulations among NMLS MLO Applicants. The following are the uniform guidelines for all states on what to expect in order to grant NMLS MLO state licenses to be able to originate residential mortgage loans:

All candidates need to have a good reputation and command the trust of the public
Be able to pass the federal and state criminal background investigation
Arrests will be evaluated on a case by case scenario
Arrests are not ignored just because the loan officer applicant was not convicted
No felony convictions in the past 7 years
Misdemeanor convictions will be evaluated on a case by case basis
Candidates with a felony conviction that pertains to financial crimes, bribery (giving and/or receiving a bribe), securities fraud, insider trading, theft, robbery, fraud are banned from ever getting a mortgage loan originator license
Credit report needs to reflect financial responsibility with no disregard for credit

Every state has its own way of conducting the above examinations. Speak With Our Loan Officer for Mortgage Loans

How To Open Your Own Mortgage Broker Company?

Many mortgage loan officers want to take the next step in the mortgage industry and open up their own mortgage broker shop. You can do that. However, you need to get your new mortgage broker shop licensed in all states you and your loan officers want to originate loans.

Every state has its own individual NMLS licensing requirements for becoming a mortgage broker. If you are a mortgage broker, you can hire loan officers to expand your business and have the mortgage broker be the sponsoring company.

In the following paragraphs, we will discuss and cover how to open up your own mortgage broker company and become your own boss. You can hire loan officers and collect an override over their production. However, as the mortgage broker, you will need to be responsible for all expenses including office expenses, payroll and benefits, processors, office expenses, rent, credit reporting fees, and support staff.

How To Obtain A Mortgage Broker License: Costs Associated With Opening Your Own Mortgage Brokerage Office?

Running a mortgage brokerage company is not cheap. One of the major costs is the cost of licensing. Each state has its own rules and regulations on fees and costs in getting licensed. You cannot originate loans in states you are not licensed. If you are a mortgage broker originating loans in just one or two states, the costs may not be too bad. However, if you intend in getting licensed in dozens of states, you can easily spend tens of thousands of dollars in getting licensed and renewals each year. All states require mortgage broker applicants to complete the mortgage broker application process through the Nationwide Mortgage Licensing System (NMLS).

Below is the list of the costs associated with applying for a mortgage broker license:

NMLS processing fee
Application fee
Credit report fee
Criminal background check fee
Surety bond fee

Fees and costs in getting your mortgage broker license depends on the individual states. Costs can vary from under $1,000 to over $4,000 per state. This is without the cost of hiring a third-party licensing agency to assist with licensing. Some states allow you to have your new mortgage brokerage company at your home. Other states will require a brick a mortar office for the headquarters and others will require a brick-and-mortar branch office for offices license outside the headquarters home office.

How To Obtain A Mortgage Broker License And Eligible To Open Own Brokerage Office?

Every state has its own individual requirements to become a mortgage broker office. Many states require the owner and/or principal of the mortgage broker to be licensed and a certain amount of years originating loans. Experience requirements may be as little as one year or as many as three years. Professional experience as a producing loan originator, sales manager, branch manager, area manager, or qualified individual is required.

Many regulators will want to see that you have been active in a mortgage company and request W-2s and/or income tax returns. Most states will require the principal of the mortgage broker is licensed. To become licensed as a mortgage loan originator, you need to take a one-time 20-hour NMLS course from an NMLS approved course provider.

You need to pass the 125 questions NMLS federal exam with a 75%. You need to be licensed in the state you are applying for a mortgage broker license as an individual NMLS loan originator. If you fail the 125 questions NMLS federal MLO exam, you need to wait 30 days before retaking it. If you fail three times, you need to wait 180 days or six months before you can retake it the fourth time.

Qualified Individual Requirement By The NMLS

Most states will require a Qualified Individual requirement from a mortgage broker who is applying for their state. The Qualified Individual does not have to be a principal. The Qualified Individual needs to be a full-time employee of the mortgage broker with a few years of full-time experience being a loan originator and/or manager.

In general, the following are the requirements of a Qualified Individual:

Residency requirement where the Qualified Individual may need to live in the state the mortgage broker is applying for an NMLS license
Have at least one year to five years of experience as a full-time loan originator and/or branch manager
The number of years experience depends on the individual state
Have a valid NMLS MLO license and properly updated CE hours
Good credit and pass the criminal background investigation
Need to be active and full-time status with the mortgage broker for the NMLS license to be valid and the mortgage broker to be able to do business in the state

If the qualified individual quits, the mortgage broker needs a replacement qualified individual.

Surety Bonding Requirements

Surety bonding requirements refer to the obligation for mortgage brokers to obtain a surety bond as part of the licensing process. This bond is a form of financial guarantee to protect consumers if the broker fails to fulfill their obligations or engages in unlawful activities. The bond amount fluctuates based on the regulations of each state but typically ranges from thousands to hundreds of thousands of dollars. By securing a surety bond, mortgage brokers showcase their dedication to ethical behavior, financial accountability, safeguarding the interests of borrowers and lenders alike. Speak With Our Loan Officer for Mortgage Loans

Frequently Asked Questions (FAQs)

What is a mortgage broker license?
A mortgage broker license is a credential issued by regulatory authorities that allows individuals or companies to act as intermediaries between borrowers and lenders in mortgage transactions. It’s a requirement in many states for those facilitating mortgage loans.
Why do I need a mortgage broker license?
A mortgage broker license is essential for legally conducting mortgage brokerage activities within a specific jurisdiction. It guarantees adherence to the laws and regulations established by the state that govern the mortgage industry, protects consumers, and upholds professional standards.
What are the basic requirements for obtaining a mortgage broker license?
Requirements vary by state but typically include completing pre-licensing education, passing a licensing exam, undergoing a background check, obtaining a surety bond, and submitting an application with the appropriate regulatory agency. Some states may also require experience in the mortgage industry or sponsorship by a licensed mortgage broker.
Can I obtain a mortgage broker license in multiple states?
Obtaining a mortgage broker license in multiple states is possible. However, the process and requirements may differ for each state. You’ll need to research and comply with the specific licensing requirements of each state where you intend to operate as a mortgage broker.
Are there any reciprocity agreements between states for mortgage broker licenses?
Some states have reciprocity agreements or recognition of licensure from other states, which can simplify obtaining a license in multiple states. However, not all states participate in such agreements, so you must check each state’s regulations individually.
How do I ensure compliance with licensing requirements in multiple states?
To ensure compliance, thoroughly research each state’s licensing requirements where you plan to operate. Keep detailed records of your education, experience, and any other documentation needed for licensure. Consider working with legal counsel or consulting experts familiar with mortgage licensing laws to navigate the process effectively.
Are there ongoing requirements to maintain a mortgage broker license?
Yes, maintaining a mortgage broker license typically requires fulfilling continuing education requirements, renewing the license periodically, and adhering to ethical and professional standards outlined by regulatory authorities.
What are the consequences of operating without a valid mortgage broker license?
Engaging in mortgage brokerage activities without a valid license can lead to significant penalties such as fines, legal repercussions, and the potential suspension or loss of the privilege to operate in the industry. Additionally, it may tarnish your professional reputation and credibility. Adhering to all licensing prerequisites is imperative to avoid these adverse outcomes.

For more information on how to obtain a mortgage broker license, you can contact us at GCA Mortgage Group by calling 800-900-8569 or text us for a faster response. You can also email us at alex@gustancho.com. Our expert Loan Officers are available even during weekends and holidays! Speak With Our Loan Officer for Mortgage Loans